UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 18, 2012
AMERICAN EAGLE OUTFITTERS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-33338 | 13-2721761 | ||
| (State of incorporation) | (Commission File Number) |
(IRS Employer Identification No.) | ||
| 77 Hot Metal Street Pittsburgh, Pennsylvania |
15203-2329 | |||
| (Address of principal executive offices) | (Zip Code) | |||
(412) 432-3300
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.05. Costs Associated with Exit or Disposal Activities
On May 18, 2012, American Eagle Outfitters, Inc. (the “Company”) announced plans to exit 77kids by american eagle (“77kids”), including all 22 stores and the online business. Management determined that it is in the best interest of the Company and its shareholders to prioritize and focus its efforts on businesses with the highest return potential.
Management is currently exploring strategic alternatives for the 77kids business, which include a full or partial disposition of assets to a third party. Pre-tax, non-cash asset impairment charges are estimated to be $16 million. At this time, the Company is unable to make a good faith estimate of additional exit charges. The Company anticipates these charges to be taken primarily in the second and third quarters, which will be disclosed as plans are finalized, as an amendment of this Form 8-K.
In fiscal 2011, 77kids generated an after-tax loss of approximately $24 million.
ITEM 2.06. Material Impairments
The information set forth in Item 2.05 is incorporated herein by reference.
ITEM 8.01. Other Events
On May 18, 2012, the Company issued a press release announcing its intent to exit the 77kids business. A copy of that press release is attached hereto as Exhibit 99.1. Additionally, the Company posted on its website historical financial data related to the 77kids business. A copy of the financial data is attached hereto as Exhibit 99.2.
ITEM 9.01. Financial Statements and Exhibits
| (d) | Exhibits |
| Exhibit No. |
Description | |
| 99.1* | Press Release dated May 18, 2012 announcing plans to exit the 77kids business | |
| 99.2* | 77kids historical financial data | |
| * | Such Exhibit is being “furnished” (not filed) pursuant to Item 8.01 of the Current Report on Form 8-K. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN EAGLE OUTFITTERS, INC. | ||||
| (Registrant) | ||||
| Date: May 24, 2012 | By: | /s/ Scott Hurd | ||
| Scott Hurd | ||||
| Vice President and Controller | ||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1* | Press Release dated May 18, 2012 announcing plans to exit the 77kids business | |
| 99.2* | 77kids historical financial data | |
| * | Such Exhibit is being “furnished” (not filed) pursuant to Item 8.01 of the Current Report on Form 8-K. |
EXHIBIT 99.1
AMERICAN EAGLE OUTFITTERS
ANNOUNCES PLANS TO EXIT ITS CHILDREN’S BRAND 77KIDS
PITTSBURGH—May 18, 2012 — American Eagle Outfitters, Inc. (NYSE: AEO) today announced plans to exit its children’s business, 77kids, which includes 22 stores and the online business. The company is currently exploring options for the business, which include a full or partial disposition of assets to a third party.
Robert Hanson, chief executive officer of American Eagle Outfitters stated, “Although making this decision is disappointing, it is in the best interest of the company and our shareholders to prioritize and focus our efforts on businesses with the highest return potential. We thank the 77kids team for their hard work, passion and dedication.”
In fiscal 2011, the brand generated an after-tax loss of approximately $24 million on sales of $40 million. The company anticipates charges associated with the disposition of 77kids to be taken primarily in the second and third quarters, which will be disclosed as plans are finalized.
As a reminder, the company will announce first quarter results on Wednesday, May 23 and will include non-GAAP results, adjusted to exclude the operations of 77kids. In conjunction with the earnings release, management will host a conference call and real time webcast at 9:00 a.m. Eastern Time. To listen to the call, dial 1-877-407-0789 or internationally dial 1-201-689-8562 or go to www.ae.com to access the webcast and audio replay.
About American Eagle Outfitters, Inc.
American Eagle Outfitters, Inc. (NYSE: AEO) is a leading global specialty retailer offering high-quality, on-trend clothing, accessories and personal care products at affordable prices under its American Eagle Outfitters®, Aerie® and 77kids® brands. The company operates more than 1,000 stores in North America, and ships to 77 countries worldwide through its websites. American Eagle Outfitters and Aerie merchandise also is available at approximately 25 international franchise stores in 10 countries. For more information, please visit www.ae.com.
Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements, which represent our expectations or beliefs concerning future events, specifically regarding charges related to the closing of 77kids. All forward-looking statements made by the company involve material risks and uncertainties and are subject to change based on factors beyond the company’s control. Such factors include, but are not limited to the risk that the expense of closing 77kids is greater than expected and the risks described in the Risk Factor Section of the company’s Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. Accordingly, the company’s future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. The company does not undertake to publicly update or revise its forward-looking statements even if future changes make it clear that projected results expressed or implied will not be realized.
CONTACT: American Eagle Outfitters Inc.
Judy Meehan, 412-432-3300
EXHIBIT 99.2
77KIDS
HISTORICAL STATEMENTS OF OPERATIONS (1)
(Dollars and shares in thousands, except per share amounts)
(unaudited)
| Fiscal 2011 Quarterly Periods Ended | ||||||||||||||||||||||||||||||||
| April 30, | % of | July 30, | % of | October 29, | % of | January 28, | % of | |||||||||||||||||||||||||
| 2011 | Sales | 2011 | Sales | 2011 | Sales | 2012 | Sales | |||||||||||||||||||||||||
| Net sales |
$ | 6,478 | 100.0 | % | $ | 6,583 | 100.0 | % | $ | 12,407 | 100.0 | % | $ | 14,285 | 100.0 | % | ||||||||||||||||
| Cost of sales, including certain buying, occupancy and warehousing expenses |
8,536 | 131.8 | % | 10,700 | 162.5 | % | 15,695 | 126.5 | % | 21,075 | 147.5 | % | ||||||||||||||||||||
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| Gross profit |
(2,058 | ) | -31.8 | % | (4,117 | ) | -62.5 | % | (3,288 | ) | -26.5 | % | (6,790 | ) | -47.5 | % | ||||||||||||||||
| Selling, general and administrative expenses |
3,239 | 50.0 | % | 3,986 | 60.6 | % | 4,896 | 39.5 | % | 5,584 | 39.1 | % | ||||||||||||||||||||
| Loss on impairment of assets |
— | 0.0 | % | — | 0.0 | % | — | 0.0 | % | 1,552 | 10.9 | % | ||||||||||||||||||||
| Depreciation and amortization |
444 | 6.8 | % | 678 | 10.3 | % | 784 | 6.3 | % | 783 | 5.5 | % | ||||||||||||||||||||
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| Operating loss |
(5,741 | ) | -88.6 | % | (8,781 | ) | -133.4 | % | (8,968 | ) | -72.3 | % | (14,709 | ) | -103.0 | % | ||||||||||||||||
| Other income, net |
— | 0.0 | % | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | ||||||||||||||||||||
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| Loss before income taxes |
(5,741 | ) | -88.6 | % | (8,781 | ) | -133.4 | % | (8,968 | ) | -72.3 | % | (14,709 | ) | -103.0 | % | ||||||||||||||||
| Benefit for income taxes |
(2,195 | ) | -33.9 | % | (3,358 | ) | -51.0 | % | (3,444 | ) | -27.8 | % | (5,628 | ) | -39.4 | % | ||||||||||||||||
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| Net loss |
$ | (3,546 | ) | -54.7 | % | (5,423 | ) | -82.4 | % | (5,524 | ) | -44.5 | % | (9,081 | ) | -63.6 | % | |||||||||||||||
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| Net loss per basic common share |
$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.05 | ) | ||||||||||||||||||||
| Net loss per diluted common share |
$ | (0.02 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.05 | ) | ||||||||||||||||||||
| Weighted average common shares outstanding—basic |
194,683 | 194,909 | 194,378 | 193,798 | ||||||||||||||||||||||||||||
| Weighted average common shares outstanding—diluted |
196,633 | 196,578 | 195,985 | 195,913 | ||||||||||||||||||||||||||||
| Fiscal 2010 Quarterly Periods Ended | ||||||||||||||||||||||||||||||||
| May 1, | % of | July 31, | % of | October 30, | % of | January 29, | % of | |||||||||||||||||||||||||
| 2010 | Sales | 2010 | Sales | 2010 | Sales | 2011 | Sales | |||||||||||||||||||||||||
| Net sales |
$ | 3,342 | 100.0 | % | $ | 2,761 | 100.0 | % | $ | 6,658 | 100.0 | % | $ | 9,504 | 100.0 | % | ||||||||||||||||
| Cost of sales, including certain buying, occupancy and warehousing expenses |
4,769 | 142.7 | % | 4,363 | 158.0 | % | 9,769 | 146.7 | % | 14,556 | 153.2 | % | ||||||||||||||||||||
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| Gross profit |
(1,427 | ) | -42.7 | % | (1,602 | ) | -58.0 | % | (3,111 | ) | -46.7 | % | (5,052 | ) | -53.2 | % | ||||||||||||||||
| Selling, general and administrative expenses |
1,578 | 47.2 | % | 1,752 | 63.5 | % | 3,509 | 52.7 | % | 3,434 | 36.1 | % | ||||||||||||||||||||
| Depreciation and amortization |
71 | 2.1 | % | 98 | 3.5 | % | 270 | 4.1 | % | 387 | 4.1 | % | ||||||||||||||||||||
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| Operating loss |
(3,076 | ) | -92.0 | % | (3,452 | ) | -125.0 | % | (6,890 | ) | -103.5 | % | (8,873 | ) | -93.4 | % | ||||||||||||||||
| Other income, net |
— | 0.0 | % | — | 0.0 | % | — | 0.0 | % | — | 0.0 | % | ||||||||||||||||||||
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| Loss before income taxes |
(3,076 | ) | -92.0 | % | (3,452 | ) | -125.0 | % | (6,890 | ) | -103.5 | % | (8,873 | ) | -93.4 | % | ||||||||||||||||
| Benefit for income taxes |
(1,169 | ) | -35.0 | % | (1,304 | ) | -47.2 | % | (2,630 | ) | -39.5 | % | (3,391 | ) | -35.7 | % | ||||||||||||||||
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| Net loss |
$ | (1,907 | ) | -57.2 | % | (2,148 | ) | -77.8 | % | (4,260 | ) | -64.0 | % | (5,482 | ) | -57.7 | % | |||||||||||||||
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| Net loss per basic common share |
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | ||||||||||||||||||||
| Net loss per diluted common share |
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.03 | ) | ||||||||||||||||||||
| Weighted average common shares outstanding—basic |
207,718 | 201,764 | 195,590 | 194,878 | ||||||||||||||||||||||||||||
| Weighted average common shares outstanding—diluted |
210,285 | 203,153 | 197,323 | 196,789 | ||||||||||||||||||||||||||||
| (1) | Represents 77kids store and online business operating results, as well as home office and other costs directly attributable to 77kids operations. |